Dbriefs Bytes

1. Cases • India: Booz - Authority for Advanced Rulings (AAR) - Non-resident affiliates of Booz India were each held to have a PE in India - Decision based on the fact that Booz India’s business is entwined with, and commercially dependent on, non-resident affiliates - Contrast between this case and Delhi High Court’s decision in e-Funds (discussed in Dbriefs Bytes last week) is striking • India: Gupta Overseas - Agra Income Tax Appellate Tribunal - Indian company failed to withhold tax from payments to non-residents - Thus, tax deduction denied for such payments - Taxpayer argued that the provision which denies the deduction breaches the non-discrimination article under the relevant treaties - Tribunal: Article 24(4) (deduction neutrality) is breached, but not Article 24(1) (nationality) 2. Japan • Consumption tax - Japan is planning to change law to impose consumption tax on in-bound supplies of services and intangibles, in B2C situations – effective 1 October 2015 - Compliance is the difficult issue - Similar issue is faced in South Africa and the EU • Foreign asset report - New report is required to be filed (for the first time) by 17 March 2014 - Failure to file can be punished by imprisonment • 2013 protocol to Japan / U.S. treaty - U.S. ratification process is “stuck” in the Senate • For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp 3. India • “Interim budget” released this week • No income tax changes • Finance Minister: Direct Taxes Code (DTC) will be placed on Finance Ministry’s website • For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 4. BEPS • G20 Finance Ministers meet in Sydney this weekend • Expect strong political statements supporting BEPS Project • Updated OECD BEPS timetable: www.deloitte.com/ap/dbriefs/bytes • For information: David Watkins (Sydney): dwatkins@deloitte.com.au 5. In brief • Treaties - India / Croatia - Philippines / Nigeria • Upcoming budgets - Singapore: today - Hong Kong: 26 February 2014 • OECD publishes comments on two discussion drafts - To access the comments, please visit www.deloitte.com/ap/dbriefs/bytes • New Zealand: Alesco case - Taxpayer’s appeal to Supreme Court discontinued after settlement agreed with tax authorities

1. Cases • India: Booz - Authority for Advanced Rulings (AAR) - Non-resident affiliates of Booz India were each held to have a PE in India - Decision based on the fact that Booz India’s business is entwined with, and commercially dependent on, non-resident affiliates - Contrast between this case and Delhi High Court’s decision in e-Funds (discussed in Dbriefs Bytes last week) is striking • India: Gupta Overseas - Agra Income Tax Appellate Tribunal - Indian company failed to withhold tax from payments to non-residents - Thus, tax deduction denied for such payments - Taxpayer argued that the provision which denies the deduction breaches the non-discrimination article under the relevant treaties - Tribunal: Article 24(4) (deduction neutrality) is breached, but not Article 24(1) (nationality) 2. Japan • Consumption tax - Japan is planning to change law to impose consumption tax on in-bound supplies of services and intangibles, in B2C situations – effective 1 October 2015 - Compliance is the difficult issue - Similar issue is faced in South Africa and the EU • Foreign asset report - New report is required to be filed (for the first time) by 17 March 2014 - Failure to file can be punished by imprisonment • 2013 protocol to Japan / U.S. treaty - U.S. ratification process is “stuck” in the Senate • For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp 3. India • “Interim budget” released this week • No income tax changes • Finance Minister: Direct Taxes Code (DTC) will be placed on Finance Ministry’s website • For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 4. BEPS • G20 Finance Ministers meet in Sydney this weekend • Expect strong political statements supporting BEPS Project • Updated OECD BEPS timetable: www.deloitte.com/ap/dbriefs/bytes • For information: David Watkins (Sydney): dwatkins@deloitte.com.au 5. In brief • Treaties - India / Croatia - Philippines / Nigeria • Upcoming budgets - Singapore: today - Hong Kong: 26 February 2014 • OECD publishes comments on two discussion drafts - To access the comments, please visit www.deloitte.com/ap/dbriefs/bytes • New Zealand: Alesco case - Taxpayer’s appeal to Supreme Court discontinued after settlement agreed with tax authorities

1. Cases • India: e-Funds - Delhi High Court - Definition of PE under India / U.S. treaty - PE status is not determined by earlier MAP agreement between the two competent authorities - Court applied OECD and UN Commentaries to conclude “no PE” - Different approach from recent cases in Spain (Roche and Dell) and India (Rolls Royce and Convergys) - For information: K.R. Sekar (Bangalore): krsekar@deloitte.com • Netherlands: Redeemable preference shares (RPS) - Netherlands Supreme Court - RPS issued by Australian subsidiary to Netherlands parent - RPS treated as debt for Australian tax purposes - Court: RPS are equity for Dutch tax purposes - For information: Hans Pijl (Amsterdam): HPijl@deloitte.nl 2. BEPS • Country-by-country reporting - UK: template included in 30 January 2014 discussion draft requires “too much information” • Unilateral action: Canada - Proposal to include “anti-treaty shopping” provision in domestic tax law - For information: Charles Taylor (Alberta): charlestaylor@deloitte.ca 3. India • Enforcement of tax return filing, in regard to royalties and technical service fees • Vodafone: conciliation talks break down • DTC: don’t hold your breath • For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 4. Taiwan • New withholding tax rules for outbound payments of certain royalties and technical service fees • Retrospective from 2011 • For information: Cheli Liaw (Taipei): cheliliaw@deloitte.com.tw 5. In brief • Singapore / Poland and New Zealand / Papua New Guinea treaties entered into force • China: Circular 2 (movement of cash out of China, on capital account) and Bulletin 9 (procedural changes regarding establishment of Chinese corporate residence based on “effective management”) - For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn • United Nations: report of October 2013 meeting of Committee of Tax Experts - To obtain a copy of the report, please visit www.deloitte.com/ap/dbriefs/bytes • Australia: revised draft determination on capital support payments - For information: David Watkins (Sydney): dwatkins@deloitte.com.au • OECD report: “Standard for Automatic Exchange of Financial Account Information” - To obtain a copy of the report, please visit www.deloitte.com/ap/dbriefs/bytes

1. Cases • India: e-Funds - Delhi High Court - Definition of PE under India / U.S. treaty - PE status is not determined by earlier MAP agreement between the two competent authorities - Court applied OECD and UN Commentaries to conclude “no PE” - Different approach from recent cases in Spain (Roche and Dell) and India (Rolls Royce and Convergys) - For information: K.R. Sekar (Bangalore): krsekar@deloitte.com • Netherlands: Redeemable preference shares (RPS) - Netherlands Supreme Court - RPS issued by Australian subsidiary to Netherlands parent - RPS treated as debt for Australian tax purposes - Court: RPS are equity for Dutch tax purposes - For information: Hans Pijl (Amsterdam): HPijl@deloitte.nl 2. BEPS • Country-by-country reporting - UK: template included in 30 January 2014 discussion draft requires “too much information” • Unilateral action: Canada - Proposal to include “anti-treaty shopping” provision in domestic tax law - For information: Charles Taylor (Alberta): charlestaylor@deloitte.ca 3. India • Enforcement of tax return filing, in regard to royalties and technical service fees • Vodafone: conciliation talks break down • DTC: don’t hold your breath • For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 4. Taiwan • New withholding tax rules for outbound payments of certain royalties and technical service fees • Retrospective from 2011 • For information: Cheli Liaw (Taipei): cheliliaw@deloitte.com.tw 5. In brief • Singapore / Poland and New Zealand / Papua New Guinea treaties entered into force • China: Circular 2 (movement of cash out of China, on capital account) and Bulletin 9 (procedural changes regarding establishment of Chinese corporate residence based on “effective management”) - For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn • United Nations: report of October 2013 meeting of Committee of Tax Experts - To obtain a copy of the report, please visit www.deloitte.com/ap/dbriefs/bytes • Australia: revised draft determination on capital support payments - For information: David Watkins (Sydney): dwatkins@deloitte.com.au • OECD report: “Standard for Automatic Exchange of Financial Account Information” - To obtain a copy of the report, please visit www.deloitte.com/ap/dbriefs/bytes

1. Cases • India: e-Funds - Delhi High Court - Definition of PE under India / U.S. treaty - PE status is not determined by earlier MAP agreement between the two competent authorities - Court applied OECD and UN Commentaries to conclude “no PE” - Different approach from recent cases in Spain (Roche and Dell) and India (Rolls Royce and Convergys) - For information: K.R. Sekar (Bangalore): krsekar@deloitte.com • Netherlands: Redeemable preference shares (RPS) - Netherlands Supreme Court - RPS issued by Australian subsidiary to Netherlands parent - RPS treated as debt for Australian tax purposes - Court: RPS are equity for Dutch tax purposes - For information: Hans Pijl (Amsterdam): HPijl@deloitte.nl 2. BEPS • Country-by-country reporting - UK: template included in 30 January 2014 discussion draft requires “too much information” • Unilateral action: Canada - Proposal to include “anti-treaty shopping” provision in domestic tax law - For information: Charles Taylor (Alberta): charlestaylor@deloitte.ca 3. India • Enforcement of tax return filing, in regard to royalties and technical service fees • Vodafone: conciliation talks break down • DTC: don’t hold your breath • For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 4. Taiwan • New withholding tax rules for outbound payments of certain royalties and technical service fees • Retrospective from 2011 • For information: Cheli Liaw (Taipei): cheliliaw@deloitte.com.tw 5. In brief • Singapore / Poland and New Zealand / Papua New Guinea treaties entered into force • China: Circular 2 (movement of cash out of China, on capital account) and Bulletin 9 (procedural changes regarding establishment of Chinese corporate residence based on “effective management”) - For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn • United Nations: report of October 2013 meeting of Committee of Tax Experts - To obtain a copy of the report, please visit www.deloitte.com/ap/dbriefs/bytes • Australia: revised draft determination on capital support payments - For information: David Watkins (Sydney): dwatkins@deloitte.com.au • OECD report: “Standard for Automatic Exchange of Financial Account Information” - To obtain a copy of the report, please visit www.deloitte.com/ap/dbriefs/bytes

1. BEPS • Action 13: TP documentation and “Country-by-Country” (CbC) reporting - Discussion draft issued on 30 January 2014 (public comments requested by 23 February 2014) - Three types of document + Common template for CbC reporting + TP documentation: master file + TP documentation: local file - To obtain a copy of the discussion draft, please visit: www.deloitte.com/ap/dbriefs/bytes - For information: Shanto Ghosh (Boston): shghosh@deloitte.com Eunice Kuo (Shanghai): eunicekuo@deloitte.com.cn Cam Smith (Melbourne): camsmith@deloitte.com.au • BEPS: Unilateral actions - Mike Danilack (U.S. competent authority): foreign tax authorities are using BEPS concepts in tax audits and MAP discussions • Action 1: Digital economy - Comments by Pascal Saint-Amans: not appropriate to formulate tax rules specifically for the digital economy - Therefore? • Action 2: Hybrid mismatch arrangements - Leaked discussion draft 2. Cases • Singapore: BBO case - Insurance company derived profit on sale of shares in subsidiary - Held to be a tax-exempt capital gain - For information: Wong Chee Ming (Singapore): cwong@deloitte.com • India: Brown & Sharpe - U.S. company’s “liaison office” in India performed sales promotion activities - Tribunal: U.S. company taxable under domestic tax law and had a PE under the India / U.S. treaty - For information: K.R. Sekar (Bangalore): krsekar@deloitte.com • India: Tesco - Hong Kong company’s “liaison office” in India performed activities related to sourcing goods for export - Tribunal: domestic tax law exemption applies - For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 3. Australia • Government releases draft legislation (third version) on the third and final element of the “investment manager” regime • Public comments requested by 14 February 2014 • To obtain a copy of the Tax Alert, please visit: www.deloitte.com/ap/dbriefs/bytes • For information: David Watkins (Sydney): dwatkins@deloitte.com.au 4. Singapore • Bitcoins - Singapore releases guidance on the GST and income tax treatment of virtual currencies such as Bitcoins - For information: Richard Mackender (Singapore): rimackender@deloitte.com • Stamp duty - Revision of rules for waiver of stamp duty in regard to transactions between associated entities - Future operation of new rules – two key changes + Deadlines for filing of application + 12 months association condition extended to intermediary companies - For information: Daniel Ho (Singapore): danho@deloitte.com 5. In brief • Treaty: India / Fiji • Hong Kong: listed REITs - For information: Patrick Yip (Hong Kong): patyip@deloitte.com.hk • Indonesia: 5% final tax on bond interest income of registered mutual funds - For information: Nazly Siregar (Jakarta): nsiregar@deloitte.com • China: Tobin tax?

1. BEPS • Action 13: TP documentation and “Country-by-Country” (CbC) reporting - Discussion draft issued on 30 January 2014 (public comments requested by 23 February 2014) - Three types of document + Common template for CbC reporting + TP documentation: master file + TP documentation: local file - To obtain a copy of the discussion draft, please visit: www.deloitte.com/ap/dbriefs/bytes - For information: Shanto Ghosh (Boston): shghosh@deloitte.com Eunice Kuo (Shanghai): eunicekuo@deloitte.com.cn Cam Smith (Melbourne): camsmith@deloitte.com.au • BEPS: Unilateral actions - Mike Danilack (U.S. competent authority): foreign tax authorities are using BEPS concepts in tax audits and MAP discussions • Action 1: Digital economy - Comments by Pascal Saint-Amans: not appropriate to formulate tax rules specifically for the digital economy - Therefore? • Action 2: Hybrid mismatch arrangements - Leaked discussion draft 2. Cases • Singapore: BBO case - Insurance company derived profit on sale of shares in subsidiary - Held to be a tax-exempt capital gain - For information: Wong Chee Ming (Singapore): cwong@deloitte.com • India: Brown & Sharpe - U.S. company’s “liaison office” in India performed sales promotion activities - Tribunal: U.S. company taxable under domestic tax law and had a PE under the India / U.S. treaty - For information: K.R. Sekar (Bangalore): krsekar@deloitte.com • India: Tesco - Hong Kong company’s “liaison office” in India performed activities related to sourcing goods for export - Tribunal: domestic tax law exemption applies - For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 3. Australia • Government releases draft legislation (third version) on the third and final element of the “investment manager” regime • Public comments requested by 14 February 2014 • To obtain a copy of the Tax Alert, please visit: www.deloitte.com/ap/dbriefs/bytes • For information: David Watkins (Sydney): dwatkins@deloitte.com.au 4. Singapore • Bitcoins - Singapore releases guidance on the GST and income tax treatment of virtual currencies such as Bitcoins - For information: Richard Mackender (Singapore): rimackender@deloitte.com • Stamp duty - Revision of rules for waiver of stamp duty in regard to transactions between associated entities - Future operation of new rules – two key changes + Deadlines for filing of application + 12 months association condition extended to intermediary companies - For information: Daniel Ho (Singapore): danho@deloitte.com 5. In brief • Treaty: India / Fiji • Hong Kong: listed REITs - For information: Patrick Yip (Hong Kong): patyip@deloitte.com.hk • Indonesia: 5% final tax on bond interest income of registered mutual funds - For information: Nazly Siregar (Jakarta): nsiregar@deloitte.com • China: Tobin tax?

1. BEPS • Action 13: TP documentation and “Country-by-Country” (CbC) reporting - Discussion draft issued on 30 January 2014 (public comments requested by 23 February 2014) - Three types of document + Common template for CbC reporting + TP documentation: master file + TP documentation: local file - To obtain a copy of the discussion draft, please visit: www.deloitte.com/ap/dbriefs/bytes - For information: Shanto Ghosh (Boston): shghosh@deloitte.com Eunice Kuo (Shanghai): eunicekuo@deloitte.com.cn Cam Smith (Melbourne): camsmith@deloitte.com.au • BEPS: Unilateral actions - Mike Danilack (U.S. competent authority): foreign tax authorities are using BEPS concepts in tax audits and MAP discussions • Action 1: Digital economy - Comments by Pascal Saint-Amans: not appropriate to formulate tax rules specifically for the digital economy - Therefore? • Action 2: Hybrid mismatch arrangements - Leaked discussion draft 2. Cases • Singapore: BBO case - Insurance company derived profit on sale of shares in subsidiary - Held to be a tax-exempt capital gain - For information: Wong Chee Ming (Singapore): cwong@deloitte.com • India: Brown & Sharpe - U.S. company’s “liaison office” in India performed sales promotion activities - Tribunal: U.S. company taxable under domestic tax law and had a PE under the India / U.S. treaty - For information: K.R. Sekar (Bangalore): krsekar@deloitte.com • India: Tesco - Hong Kong company’s “liaison office” in India performed activities related to sourcing goods for export - Tribunal: domestic tax law exemption applies - For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 3. Australia • Government releases draft legislation (third version) on the third and final element of the “investment manager” regime • Public comments requested by 14 February 2014 • To obtain a copy of the Tax Alert, please visit: www.deloitte.com/ap/dbriefs/bytes • For information: David Watkins (Sydney): dwatkins@deloitte.com.au 4. Singapore • Bitcoins - Singapore releases guidance on the GST and income tax treatment of virtual currencies such as Bitcoins - For information: Richard Mackender (Singapore): rimackender@deloitte.com • Stamp duty - Revision of rules for waiver of stamp duty in regard to transactions between associated entities - Future operation of new rules – two key changes + Deadlines for filing of application + 12 months association condition extended to intermediary companies - For information: Daniel Ho (Singapore): danho@deloitte.com 5. In brief • Treaty: India / Fiji • Hong Kong: listed REITs - For information: Patrick Yip (Hong Kong): patyip@deloitte.com.hk • Indonesia: 5% final tax on bond interest income of registered mutual funds - For information: Nazly Siregar (Jakarta): nsiregar@deloitte.com • China: Tobin tax?

1. BEPS • OECD webcast - Update on the 6 actions which will be finalized by September 2014 - Little new information - However, no reference to this week's newspaper story that task force has decided that specific rules for "pure play digital companies" will not work - Interesting Q&A session - To obtain a copy of the recorded webcast, www.deloitte.com/ap/dbriefs/bytes • Submission on PE avoidance schemes - Only one submission made - To obtain a copy of the submission, click here • Canada: OTIP - Canadian tax authorities launch Offshore Tax Informant Program (OTIP) - Under OTIP, Canadian tax authorities will pay rewards to informants who provide information on international tax non-compliance, both tax evasion and offshore tax avoidance 2. Cases • India: Uttam Galva Steel - Mumbai Income Tax Appellate Tribunal - Offshore procurement company - Tribunal: TP position must be determined on aggregate basis, not by looking at each type of transaction separately - For information: Anis Chakravarty (Mumbai): anchakravarty@deloitte.com • U.S.: Rent-A-Center - U.S. Tax Court - U.S. group sets up captive insurance company in Bermuda - Insurance company provides insurance to its U.S. sister subsidiaries only - Court held that the insurance arrangements were bona fide and should be respected for tax purposes 3. Hong Kong • Tax audits regarding offshore funds - Hong Kong tax authorities have commenced a tax audit initiative in regard to offshore fund structures • Company law change: amalgamations - Hong Kong company law will be changed, effective 3 March 2014, to permit the amalgamation of Hong Kong incorporated companies within a group, without the need for court approval • For information: Anthony Lau (Hong Kong): antlau@deloitte.com.hk 4. Australia • Australian tax authorities consider proposal to outsource parts of tax audits to external auditors, which would generally be the Big 4 accounting firms • For information: David Watkins (Sydney): dwatkins@deloitte.com.au 5. China • SAT reports single largest transfer pricing adjustment in regard to cross-border service charges: taxes and interest of US$132 million • Two "bad facts": (a) switch of allocation methodology, (b) Chinese companies had no legal, or economic, rights to IP which results from recharged R&D • For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 6. In brief • UN: invitation for submissions regarding UN TP Manual • India / Albania treaty entered into force • Japan: still focused on tax rates

1. BEPS • OECD webcast - Update on the 6 actions which will be finalized by September 2014 - Little new information - However, no reference to this week's newspaper story that task force has decided that specific rules for "pure play digital companies" will not work - Interesting Q&A session - To obtain a copy of the recorded webcast, www.deloitte.com/ap/dbriefs/bytes • Submission on PE avoidance schemes - Only one submission made - To obtain a copy of the submission, click here • Canada: OTIP - Canadian tax authorities launch Offshore Tax Informant Program (OTIP) - Under OTIP, Canadian tax authorities will pay rewards to informants who provide information on international tax non-compliance, both tax evasion and offshore tax avoidance 2. Cases • India: Uttam Galva Steel - Mumbai Income Tax Appellate Tribunal - Offshore procurement company - Tribunal: TP position must be determined on aggregate basis, not by looking at each type of transaction separately - For information: Anis Chakravarty (Mumbai): anchakravarty@deloitte.com • U.S.: Rent-A-Center - U.S. Tax Court - U.S. group sets up captive insurance company in Bermuda - Insurance company provides insurance to its U.S. sister subsidiaries only - Court held that the insurance arrangements were bona fide and should be respected for tax purposes 3. Hong Kong • Tax audits regarding offshore funds - Hong Kong tax authorities have commenced a tax audit initiative in regard to offshore fund structures • Company law change: amalgamations - Hong Kong company law will be changed, effective 3 March 2014, to permit the amalgamation of Hong Kong incorporated companies within a group, without the need for court approval • For information: Anthony Lau (Hong Kong): antlau@deloitte.com.hk 4. Australia • Australian tax authorities consider proposal to outsource parts of tax audits to external auditors, which would generally be the Big 4 accounting firms • For information: David Watkins (Sydney): dwatkins@deloitte.com.au 5. China • SAT reports single largest transfer pricing adjustment in regard to cross-border service charges: taxes and interest of US$132 million • Two "bad facts": (a) switch of allocation methodology, (b) Chinese companies had no legal, or economic, rights to IP which results from recharged R&D • For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 6. In brief • UN: invitation for submissions regarding UN TP Manual • India / Albania treaty entered into force • Japan: still focused on tax rates

1. BEPS • OECD webcast - Update on the 6 actions which will be finalized by September 2014 - Little new information - However, no reference to this week's newspaper story that task force has decided that specific rules for "pure play digital companies" will not work - Interesting Q&A session - To obtain a copy of the recorded webcast, www.deloitte.com/ap/dbriefs/bytes • Submission on PE avoidance schemes - Only one submission made - To obtain a copy of the submission, click here • Canada: OTIP - Canadian tax authorities launch Offshore Tax Informant Program (OTIP) - Under OTIP, Canadian tax authorities will pay rewards to informants who provide information on international tax non-compliance, both tax evasion and offshore tax avoidance 2. Cases • India: Uttam Galva Steel - Mumbai Income Tax Appellate Tribunal - Offshore procurement company - Tribunal: TP position must be determined on aggregate basis, not by looking at each type of transaction separately - For information: Anis Chakravarty (Mumbai): anchakravarty@deloitte.com • U.S.: Rent-A-Center - U.S. Tax Court - U.S. group sets up captive insurance company in Bermuda - Insurance company provides insurance to its U.S. sister subsidiaries only - Court held that the insurance arrangements were bona fide and should be respected for tax purposes 3. Hong Kong • Tax audits regarding offshore funds - Hong Kong tax authorities have commenced a tax audit initiative in regard to offshore fund structures • Company law change: amalgamations - Hong Kong company law will be changed, effective 3 March 2014, to permit the amalgamation of Hong Kong incorporated companies within a group, without the need for court approval • For information: Anthony Lau (Hong Kong): antlau@deloitte.com.hk 4. Australia • Australian tax authorities consider proposal to outsource parts of tax audits to external auditors, which would generally be the Big 4 accounting firms • For information: David Watkins (Sydney): dwatkins@deloitte.com.au 5. China • SAT reports single largest transfer pricing adjustment in regard to cross-border service charges: taxes and interest of US$132 million • Two "bad facts": (a) switch of allocation methodology, (b) Chinese companies had no legal, or economic, rights to IP which results from recharged R&D • For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 6. In brief • UN: invitation for submissions regarding UN TP Manual • India / Albania treaty entered into force • Japan: still focused on tax rates

1. BEPS • Digital economy: OECD publishes comments - 17 organizations made comments, including Deloitte - To obtain a copy of all comments, visit www.deloitte.com/ap/dbriefs/bytes - For information: Bill Dodwell (London): bdodwell@deloitte.co.uk Alison Lobb (London): alobb@deloitte.co.uk • Digital economy: EU expert group - Publication of papers following its first meeting in December - To obtain a copy of the papers, visit www.deloitte.com/ap/dbriefs/bytes • OECD webcast - Thursday, 23 January, 3pm to 4pm (CET) - To register for the webcast, go to http://www.oecd.org/tax/beps-webcasts.htm • Netherlands hesitates on country-by-country reporting - For information: Hans Pijl (Amsterdam): HPijl@deloitte.nl 2. Cases • Customs duty case: Skechers • Canadian International Trade Tribunal • Contribution payments for “unsuccessful” R&D: should the payments be included in the customs value? • Key issue: are such payments “in respect of” the imported goods? • Tribunal decides in favor of customs authorities • For information: Bob Fletcher (Singapore): bobfletcher@deloitte.com Dan Kiselbach (Vancouver): dkiselbach@deloittetaxlaw.ca 3. China • Amended company law - Objectives of simplifying the process and relaxing the requirements for forming a Chinese company - Amendments effective on 1 March 2014 • Circular 96 - VAT and consumption tax guidance on e-commerce exports • For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 4. Bitcoins • Huge gyrations in value • Response of different countries varies • Number of businesses accepting payments in Bitcoins increases 5. In brief • Vietnam: APA program - For information: Tom McClelland (Ho Chi Minh): tmcclelland@deloitte.com • Treaties - Japan / Oman: treaty signed - Singapore / Morocco: treaty entered into force • Hong Kong: captive insurance - For information: Anthony Lau (Hong Kong): antlau@deloitte.com.hk • Australia: patent box - For information: David Watkins (Sydney): dwatkins@deloitte.com.au

1. BEPS • Digital economy: OECD publishes comments - 17 organizations made comments, including Deloitte - To obtain a copy of all comments, visit www.deloitte.com/ap/dbriefs/bytes - For information: Bill Dodwell (London): bdodwell@deloitte.co.uk Alison Lobb (London): alobb@deloitte.co.uk • Digital economy: EU expert group - Publication of papers following its first meeting in December - To obtain a copy of the papers, visit www.deloitte.com/ap/dbriefs/bytes • OECD webcast - Thursday, 23 January, 3pm to 4pm (CET) - To register for the webcast, go to http://www.oecd.org/tax/beps-webcasts.htm • Netherlands hesitates on country-by-country reporting - For information: Hans Pijl (Amsterdam): HPijl@deloitte.nl 2. Cases • Customs duty case: Skechers • Canadian International Trade Tribunal • Contribution payments for “unsuccessful” R&D: should the payments be included in the customs value? • Key issue: are such payments “in respect of” the imported goods? • Tribunal decides in favor of customs authorities • For information: Bob Fletcher (Singapore): bobfletcher@deloitte.com Dan Kiselbach (Vancouver): dkiselbach@deloittetaxlaw.ca 3. China • Amended company law - Objectives of simplifying the process and relaxing the requirements for forming a Chinese company - Amendments effective on 1 March 2014 • Circular 96 - VAT and consumption tax guidance on e-commerce exports • For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 4. Bitcoins • Huge gyrations in value • Response of different countries varies • Number of businesses accepting payments in Bitcoins increases 5. In brief • Vietnam: APA program - For information: Tom McClelland (Ho Chi Minh): tmcclelland@deloitte.com • Treaties - Japan / Oman: treaty signed - Singapore / Morocco: treaty entered into force • Hong Kong: captive insurance - For information: Anthony Lau (Hong Kong): antlau@deloitte.com.hk • Australia: patent box - For information: David Watkins (Sydney): dwatkins@deloitte.com.au

1. BEPS • Digital economy: OECD publishes comments - 17 organizations made comments, including Deloitte - To obtain a copy of all comments, visit www.deloitte.com/ap/dbriefs/bytes - For information: Bill Dodwell (London): bdodwell@deloitte.co.uk Alison Lobb (London): alobb@deloitte.co.uk • Digital economy: EU expert group - Publication of papers following its first meeting in December - To obtain a copy of the papers, visit www.deloitte.com/ap/dbriefs/bytes • OECD webcast - Thursday, 23 January, 3pm to 4pm (CET) - To register for the webcast, go to http://www.oecd.org/tax/beps-webcasts.htm • Netherlands hesitates on country-by-country reporting - For information: Hans Pijl (Amsterdam): HPijl@deloitte.nl 2. Cases • Customs duty case: Skechers • Canadian International Trade Tribunal • Contribution payments for “unsuccessful” R&D: should the payments be included in the customs value? • Key issue: are such payments “in respect of” the imported goods? • Tribunal decides in favor of customs authorities • For information: Bob Fletcher (Singapore): bobfletcher@deloitte.com Dan Kiselbach (Vancouver): dkiselbach@deloittetaxlaw.ca 3. China • Amended company law - Objectives of simplifying the process and relaxing the requirements for forming a Chinese company - Amendments effective on 1 March 2014 • Circular 96 - VAT and consumption tax guidance on e-commerce exports • For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn 4. Bitcoins • Huge gyrations in value • Response of different countries varies • Number of businesses accepting payments in Bitcoins increases 5. In brief • Vietnam: APA program - For information: Tom McClelland (Ho Chi Minh): tmcclelland@deloitte.com • Treaties - Japan / Oman: treaty signed - Singapore / Morocco: treaty entered into force • Hong Kong: captive insurance - For information: Anthony Lau (Hong Kong): antlau@deloitte.com.hk • Australia: patent box - For information: David Watkins (Sydney): dwatkins@deloitte.com.au

1. Cases • Casio - Delhi Income Tax Appellate Tribunal - "Excessive" amount of advertising, marketing and promotion (AMP) expenditure - Charge-back principle applies, even though the Indian company is a fully-fledged distributor - For information: Anis Chakravarty (Mumbai): anchakravarty@deloitte.com • Li and Fung - Delhi High Court - Indian company rewarded by related Hong Kong company on "cost plus 5%" basis for performance of sourcing functions - Tax authorities argued that the purchase price of goods should be included in the cost base, and that the Indian company assumed significant risks - Court: decision for taxpayer - For information: Anis Chakravarty (Mumbai): anchakravarty@deloitte.com • Dash Engineering - Philippines Supreme Court - Taxpayer failed to file petition for judicial review (for refund of excess VAT input tax) within 30 day "window" - Court denies refund - For information: Fredieric Landicho (Manila): flandicho@deloitte.com 2. China • Bulletin 72 - Non-recognition treatment for certain share reorganizations - "Foreign to foreign" + Non-recognition treatment will not apply if transferee is in better "capital gains" treaty position than transferor + If transferee is in better "dividend withholding tax" treaty position than transferor, non-recognition treatment can still apply, but transferee will be denied lower treaty rate for dividends paid out of pre-acquisition profits. Treaty override? - For information: Vicky Wang (Shanghai): vicwang@deloitte.com.cn Ye Hong (Shanghai): hoye@deloitte.com.cn • Circular 698 case - Largest tax bill for a circular 698 (indirect share transfer) case 3. India • TP safe harbors - Central Board directs that safe harbors are not evidence of arm's length prices - For information: Anis Chakravarty (Mumbai): anchakravarty@deloitte.com • Vodafone - News report that Vodafone and government are likely to commence conciliation talks in regard to all outstanding tax disputes 4. Japan • 2014 tax reform proposals • Reduction in effective corporate income tax rate from approximately 38% to 35% • For Japanese brances of foreign companies and foreign branches of Japanese companies: change from "entire income" rule to profit attribution rule (effective for income year commencing on 1 April 2016) • For information: Jun Takahara (Tokyo): jun.takahara@tohmatsu.co.jp 5. In brief • Treaties: entry into force - Belgium / China - Singapore / Belarus - India / Latvia - Thailand / Estonia - India / UK (protocol) • Australia - Backlog of unlegislated measures - Discussion draft on thin cap - For information: David Watkins (Sydney): dwatkins@deloitte.com.au • BEPS - Italy: "Google tax" - Discussion drafts and public consultations: February to May